Financial Services Debacle: Mastering Followship

As the story about the SEC’s civil suit against Goldman Sachs unfolds, there are many arguments and little wonder. The SEC is arguing that the information investors received was inadequate in context. The papers argue that the rating agencies would have made different assessments if they knew John Paulson was not bullish on housing prices. Goldman Sachs is arguing that the sophisticated investors should have gone after more of the information that they considered to be material and available. The investors are arguing that they would have made different decisions had they known John Paulson was involved. John Paulson isn’t really arguing as far as I know. He doesn’t really have the right now. However, he is probably wondering.

Mr. Paulson may or may not be wondering about the latest financial debacle, but he is most certainly wondering about housing prices and other markets to which he is finely tuned. Because that is what he does. It is his job. And he knows how to turn it into an opportunity (intentions and motivations aside). He is just forging ahead, wishing the best to the arguers. This is a clear case of follow the leader, perhaps blindly.

The investors didn’t know who the leader was. Sometimes people who look like leaders are actually following. And followers will often shape a decision based on the “who” and not the “what” or the “why.” They master “followship” versus leadership.

Many argue that innovation—much of the time—doesn’t pay off, and that fast following is better. There is still a clear need for leaders, especially those with the right intentions.

If you want to identify the true leaders in your industry or organization, look for those who wonder about the future versus argue about the past. People who invent the future and chart new courses to profitability and success maintain a constant state of wonder, and are rarely in a state of blame.